Watching television, charging your cell
phone, keeping food frozen, and
micro-waving popcorn, can no longer be done. Every task
requires
planning and, much more physical labor—consider what it would
take
to wash and dry your laundry. Without electricity, all business
and
governmental systems would stop cold. Imagine a world without
money transactions. Payrolls couldn’t be met, loans would languish,
and interest accruals couldn't be calculated. This is the stuff of a
great
Hollywood thriller.

But for RuggedCom,
Inc., (RUGGF:
Pink) a manufacturer of
ruggedized communications equipment for utility substations,
it is a serious reality. The company’s products are designed
for
the smart grid, with interconnectivity options and security
features
necessary for regulatory compliance. Utility customers are able
to
prevent accidental or malicious service disruptions by
establishing
an electronic security perimeter with its
routers and switches around
critical infrastructure.

RuggedCom designs its routers, switches,
serial servers, and
media converters to withstand extreme weather conditions such
as
heat waves and the negative effects of natural phenomenon like
lighting
strikes. The products are also immune to radio and electro
magnetic
interference.

In March a major US utility company
agreed to purchase $2 million
worth of RuggedSwitch and RuggedRouter products for about 300
substations over the next four years. The units will be used to create
secure communications networks for use in substation
automation
and smart grid applications, according to a company press release,
dated March 17. The document did not disclose the name or location
of the utility company.

A router is a high-speed highway for
transporting packets of
information among a network of computers, and a switch acts
as a bridge between the highway segments. Similar to the Internet, the
smart
grid is designed to isolate disruptions and prevent cascading
events.

So far, RuggedCom has lassoed 40 percent
of the worldwide
substation market, according to Manish Grigo, research analyst
at Toll
Cross Securities, Inc., in Toronto, because the
hardware
is outperforming that of its competitors. He recommended the
company’s stock as a buy.

The company’s fundamentals are strong,
said Grigo,
even though share price has fluctuated lately. Over the
past 52 weeks, share price soared to $26.29 from $8.87,
according to Bloomberg—an 86 percent return.

“I would expect some lumpiness along the
way,” Grigo
said. “But if someone is in it for the long-term, you
definitely
will benefit from this stock.”

Utility companies test
equipment extensively before
making a purchase, he said, and typically
stagger their purchases over several years. Therefore,
once a company settles on a supplier, utility
officials
will likely continue to buy from it.

“They don’t upgrade their entire network
all at once," he said.
“They do it over 5 and ten year periods, so they will be customers
for the long haul.”
Company officials will announce fiscal
2010 second quarter
results, ending September 30, today. (Nov. 5) At the end of its
first
fiscal quarter on June 30, profits were up 26 percent from the
comparable quarter a year earlier and net income was $0.9
million,
representing the seventeenth consecutive quarter of
profitability,
according to a company
announcement.